A big percentage of money in the crypto market is made up of stablecoins. A type of cryptocurrency whose value is tied to an outside asset. Tether and USDC are the most well known ones. Both are pegged to the US dollar. Danish company e-Money is a rising player in this field. Not only their disruptive business model stands out. It’s their commitment to transparency that makes them a different breed.
“Our stablecoins are asset-backed and interest-bearing,” says co-founder Henrik Aasted Sørensen. “There is a one to one relation. Our reserves sit in a commercial bank in Denmark.” To prove that this is actually the case, accountancy firm Ernst & Young will conduct a quarterly audit.
The vision for e-Money is connecting the traditional finance world with blockchain. So far, they have issued stablecoins for the Euro, the Swiss Franc, and the Danish, Norwegian and Swedish Kroners. Stablecoins are not only a safe haven for traders who want to monetize profits from the highly volatile crypto markets. “We see an increase in interest from institutional companies. They are taken by the properties we provide, like quick and cheap transactions and immediate finalizations. Our regulatory process and transparency is even more important.”
Tech versus Compliance
The company was founded by Sørensen and Martin Dyring-Andersen in 2017. Both entrepreneurial-minded IT developers, they got to know each other in high school. Sørensen made a name for himself as a student by creating the first version of AdBlock Plus. Dyring-Andersen’s career saw him founding several companies and building algorithmic trading software. “e-Money may seem like a tech company, but we spent more time and money on getting the regulations right. It took a while to find a Danish bank that wanted to work with us,” says Sørensen.
While working through the legal aspects, the e-Money protocol was built on Cosmos. This allowed them to do a token sale for the introduction of the NGM token last autumn 2020. “This is a staking token that serves to secure the chain and as an incentive mechanism to grow our ecosystem.” Sørensen explains that their stablecoins are interest-bearing. “We add a 1% annual interest. This percentage is to buy back and burn the NGM token. It creates buy pressure that scales with the size of the stablecoin issuance and could increase the value of NGM.”
With the release of their native NGM token and the recent bridge to Ethereum, the team is working hard to grow the e-Money ecosystem. “We need more on and off-ramps, so people can convert to fiat or crypto. Exchanges play a big role in this, but we are also looking to integrate with DeFi lenders and credit card issuers.”
Being from the EU is an advantage, according to Sørensen: “Exchanges and big institutional players are a bit scared of US stablecoins, because the regulations in the US are fairly unpredictable. The reach of the American legislator is quite long. There is also a strong need for different currencies. The Euro zone is updating their regulations in this area. We are following it closely. It’s very important to us to stay compliant.”
Future of stablecoins
Stabecoins play an important role in the crypto market. At the same time, central banks all over the world are exploring the possibilities to issue a digital version of their national currency. Wouldn’t these so-called CBCD’s take over the role of stablecoins? “It is far from clear what Central Banks are building,” says Sørensen. “A lot of dream scenarios are being projected. But what will all of this mean from an account point of view. And what will this entail for commercial banks when central banks govern the CBCD?”
Being from Denmark, Sørensen keeps a close eye on what is happening in neighboring country Sweden. “They seem to be most far ahead. Their model looks like a permission system where you can exchange value. It can still change quite a lot until the release though. It’s a very exciting area but the timelines for these projects are quite long. It’s not like crypto where ten years feels like one year (laughs).”
Having said that, it raises the question how you stay relevant and true to your vision in an industry where there is so much development happening. “Our model has changed,” acknowledges Sørensen. “We started out thinking a large Euro balance was a good idea and using the interest bearing as staking rewards. Then we thought NGM staking and buy backs would be better.”
Changing the business concept had its impact on the technological developments as well. Building a custom DEX to be able to easily exchange the various stablecoins turned out to be a difficult challenge. Sørensen is relieved that they are in a good state now. “We have four engineers in the team. The coming period we are developing wallet features, upgrading to IBC on Cosmos and working with partners on custom integrations.”
The future looks bright for the Danes. “We have found the right model for e-Money. Our team is expanding. We just hired a CFO to help strengthen our relationship with banks and talking to financial partners. Our goal is to make something sustainable. Issuing regulatory compliant stablecoins with high transparency is what we want to bring to the crypto industry.”
Listen to the full interview on YouTube. Henrik Aasted Sørensen talks about the Danish crypto scene, going into business with a close friend and the technical intricacies of creating your own blockchain. Listen here or play below.
Official website: https://e-money.com/
Coingecko profile: https://www.coingecko.com/en/coins/e-money
NGM token can be bought on Uniswap and AscendEx (referral link)